All Forum Posts by: Jonathan Greene

@Danielle E. that is absolutely the right way to do it. If you learn a market, visit it, know the blocks, then it becomes your area whether you live there or not. It does still take time to build the right team, but if they know you know the area and have contacts that can check on them you can control it. If I go into a foreign market I do the same. I go there and know it better than locals. What you are doing is NOT what most people are trying to do. They are evaluating cities on the computer or through a "guru" and then trusting everything.

With what other said I still think you can always invest in your own market or nearby. If you have 50k to invest and the market is good, your appreciation will be much better and your rents will be higher. Too many people make the mistake of getting three properties in areas they don't know instead of one closer to where they do, but the metrics end up being similar with more headache.

@Henry Lazerow I agree that B out of state makes sense, but you are dealing with investors who already invest most likely. New investors don't know a B from a C and in the end those letters are arbitrary determinations by local real estate investors who may or may not know anything. The city isn't calling their areas C and D areas, it's a made-up system that takes into account random data points and personal preference and "skill."

I'm sorry to say, but that is the worst advice I've ever heard @Cassandra Sifford. What is a development committee and what do you have to add value to them for them giving you information on the best areas to invest near them? It doesn't make sense, but I hope it works out for you.

@Aaron K. I agree, it sounds good to go out of state, but they aren't thinking about how it really works. Everyone is in too much of a rush because 90% of the "experts" in REI tell them to buy anything for cheap, all deals you can do seller financing, and you can house hack everywhere.

@Ryan Evans yup. It's like a weird obsession to own something that you will never see. You at least were going to see it and getting to know the area. These days people think they can go on Niche and get a whole community. It's ludicrous. I am ok with OOS investing, but not for new people. If you don't know what the properties are like, how can you invest in them where you can't even see them? Maybe that's easier, like a cheat code, but it's not smart. You got lucky, but you also made the effort to look and see.

@Christopher Leet I agree that places you've lived before are great, but still hard for a first-time investor. It's a best-case approach and at least you know the areas well and can trust people. I've invested in areas where I had a close friend and done vacation rental because they were there to monitor it so it can work. It's just that so many people are giving advice like to invest in an area that you only learned about online and that will never work out. 

I am a no on Irvington. All my friends who have larger buildings there are trying to get out. Which does mean there are plenty of "deals" there, but I don't want them. I am fine with many areas in Newark, East Orange, and Orange, but you have to know the blocks very well. The problem with Irvington is that there isn't growth potential there, the market isn't going to go up. In areas of Newark and the Oranges market values have gone up. Irvington has not and will not because there are too many distressed areas and it's not big like Newark to be able to withstand the amount of distressed versus a market level.

Batch-SMS is a terrible strategy and everyone hates it when they receive it. The only way that text messaging works for sellers is after you have confirmed that they are ok to receive text messages in lieu of calls. Everyone knows a BS mass text these days. Do not waste your time. Texting should be a communicative thing for sellers you have a relationship with. Do you know anyone who got a blind text and responded? I didn't think so.

Every day in the forums it's the same thing. "I'm just getting started and I've analyzed a ton of deals (never seen any in real life) in several markets that are nowhere near where I live because where I live there aren't any good deals."

Here are some things to consider:

- Do you want to learn about REI or just be a passenger on someone else's plane? If you want to learn about REI, you aren't going to learn anything by investing in a first deal out-of-state. You could make money, but you will have no more knowledge of what it actually takes to be a better investor since you haven't seen any deals in person. And your entire investment will be managed and reviewed and maintained by someone you probably don't know very well.

- Why do you think there are no deals around your area? There are, you just don't know how to find them. If your 10-mile radius is overpriced, go up to 30 miles. You can't tell that within 30 miles of anywhere there isn't an up-and-coming area that has yet to hit its peak with deals available. Learn how to find local deals instead of hopping on the train of everyone who wants to sell you swampland in the Everglades for a great price.

- If this is going to be the single biggest investment in your life to-date, which most likely it is since you are new, why do you want to do this out-of-state and out-of-mind? What other investments are like this?

- Ask yourself how many properties you have seen in real life? How many times have you figured out what good electrical looks like and what bad electrical looks like? What about foundation issues? Do you know what markets have a saturation of abandoned oil tanks as possibilities? Even if you plan on investing out-of-area in the future, you should still be seeing 25-50 properties in person before you buy anything anywhere. Why would you take all this money and invest in something you haven't even put the time in to understand in real life.

- Analyzing deals on the computer or in a calculator, with no actual RE experience, is playing video games. You can calculate what a deal in Cleveland looks like based on Internet metrics, but which town is set to explode next? Who is telling you what is B- versus D in an area? Who can you trust there that DOES NOT have an interest in the sale?

Those of us who have been investing for 30 years don't talk about BRRR and we don't use acronyms for everything. I get why they are exciting concepts, but you can't talk investing well online and then expect to walk into an area and have old-school investors and sellers have any idea what you are talking about. The only way to get good as a real estate investor is to do the work in the field.

You have to know what a dump of a house looks like, feels like and smells like so when you look at photos of a crapshow in some random town that is a "steal" you know that it needs more than lipstick to go back on the market. REI, just like the Internet and Instagram, seems easy and looks cool online when you see everyone and their cousin flipping, but most people lose money in real estate. They just aren't here to say how bad they are doing because they hate real estate so much, got bad advice, and were scammed.

Stop looking at every market that is hot because if someone tells you it's hot now, you are one year too late. Find the area within 30 miles of you that is next to the last area where home prices have just gone up. Focus there. Get off the computer and calculator and go see properties, as many as your agent friend will take you to see.

I don't understand the mentorship. Where do you live? How many properties do you have where you live? What's the point of cyber-evaluating markets from a computer? You won't learn about those markets and how to get the best deals in out-of-state markets until you visit them and get the block flow and which is the next "it" area. Until you've mastered your local area and the up-and-coming spots around it, what kind of mentorship sends you to sit at your computer and scroll through lists online of what's good. Hint: if something is listed online as the best place to invest, it was good to invest a year ago.

Asking for out-of-state referrals and options is only going to get you a lot of links and experts in the area, some actually very good, but do you really want to invest out of state for your first investment, coupled with the fact that you will be doing it with friends. Who is in charge? Who is going to preview all the areas? Who is responsible for property management? Why can't you work harder to find something closer to you that you can see? What can you learn from long-distance investment for your first investment?

If you want to learn how to do better in the future with REI, you have to go see properties and understand what has to be done to renovated, what turnkey looks like, what all the costs are, and none of this can be done by searching neighborhood websites and using BP calculators. Those options are better for seasoned investors who can be loose with the numbers.

In any other context besides real estate, why would someone buy something sight unseen, never having visited the area, with no known contact for oversight of the investment, and expect it to do well? If you are your friends are going in together with 90k, make sure you can learn first-hand from doing it instead of trusting some people you don't know, out of state, that it will all work out.

Those numbers are about 3x too low for any areas that will appreciate in Florida for what you are planning to do. Also, Florida is the toughest state on unlicensed contracting in the country because of what happened after Hurricane Andrew. If you aren't licensed in FL as a contractor I wouldn't count on swinging in and doing the work yourself being as easy as it seems. There are places in Florida where you can get closer to your numbers, but it is slow there and deals may be out there, but appreciation is low. You could look at an area like Deland which is more rural, but rents are ok.

A lot of the terms you are using are BP-friendly, but won't get you far investing in out-of-state markets. The BRRR method and house hacking and neighborhood grading systems are not always applicable or understandable across the board for who you will work with in each market. And if you don't have a marketing strategy, counting on owner-financed is not wise. That takes specific marketing and targeting, as will all areas where you will need to send a lot out to get very few leads and then they will want to know you are local and available.

Do nothing until a contract of some kind is signed. It doesn't have to be perfect. The closing date could be far off, but don't fix things without a contract. But unless you are a licensed plumber I would not fix anything in her house that has to do with plumbing. What happens when you leave and then it bursts?